More “green jobs” go where other jobs have gone: to China

Posted on January 14, 2011

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Yes, those extra special sparkly green jobs that were touted over and over again by President Obama as the way to save both our economy and our environment in one fail swoop are now flying the coop, but only after taking some taxpayer money first. The latest is Evergreen Solar:

Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.

Why oh why would this business do such a thing?

Evergreen, in announcing its move to China, was unusually candid about its motives. Michael El-Hillow, the chief executive, said in a statement that his company had decided to close the Massachusetts factory in response to plunging prices for solar panels. World prices have fallen as much as two-thirds in the last three years — including a drop of 10 percent during last year’s fourth quarter alone.

Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China. (emphasis mine)

China offers “unbeatable assistance to Chinese solar panel companies,” and let’s admit it, we all know that labor is a lot cheaper in China:

Factory labor is cheap in China, where monthly wages average less than $300. That compares to a statewide average of more than $5,400 a month for Massachusetts factory workers. But labor is a tiny share of the cost of running a high-tech solar panel factory, Mr. El-Hillow said. China’s real advantage lies in the ability of solar panel companies to form partnerships with local governments and then obtain loans at very low interest rates from state-owned banks.

A $5,100 per month difference per worker doesn’t seem like such a small reason for the company’s moving overseas. It may not be the main one, but it certainly isn’t negligible either.

In total, China heavily subsidizes its solar companies, and in the case of its loans, won’t require any principal or interest payments until 2015. Couple that with extra low labor costs and you’ve got a hotbed of manufacturing growth just waiting to happen.

Given the incentives it isn’t surprising that Evergreen Solar hasn’t been the only company to take its newly minted, freshly squeezed green jobs out of the country:

Other solar panel manufacturers are also struggling in the United States. Solyndra, a Silicon Valley business, received a visit from President Obama in May and a $535 million federal loan guarantee, only to say in November that it was shutting one of its two American plants and would delay expansion of the other.

First Solar, an American company, is one of the world’s largest solar power vendors. But most of its products are made overseas.

So the question is, “With China quickly sucking up all these green jobs and leaving little in its wake, what do we do next?”